Cut in corporate tax rates likelyFocus on wholesome pruning in tax exemptions
New Delhi, November 6
The government is expected to set in motion a major tax reforms initiative next year with the report of the Kelkar Task Force as the guiding principle, which may include a reduction in corporate tax rates with appropriate focus on significantly pruning the exemptions list.

No loss caused to BSNL, says Ambani
New Delhi, November 6
Reliance Group Chairman Mukesh Ambani today said the company would approach the authorities to ensure that the consumer does not suffer because of a “commercial dispute” between its telecom venture and the BSNL.

Wife backs PM on petro price hike
New Delhi, November 6
Amidst criticism on increasing prices of petroleum products, Prime Minister Manmohan Singh today got support from his wife Gursharan Kaur on the issue who asked people to make a “sacrifice”.

HP gets Rs 540-cr WB project
Shimla, November 6
The World Bank has cleared a Rs 540-crore watershed development project for the Mid-Himalayas of the state.

Aviation Notes
Regular flyers should rate CISF behaviour
THE Central Industrial Security Force (CISF), in an image-building effort, has introduced ‘form-filling norm’ by passengers to determine their ‘service with smile’.

Investor guidance
10 pc tax on short-term gains
Q: I want you to confirm that if a stock market trader does non-delivery
based transactions above Rs. 40 lakh in short-term, does he need to get
his accounts audited? In the case of non-delivery based transactions,
what is the criterion to get the activity labeled as speculation
trading?

New Delhi, November 6
The government is expected to set in motion a major tax reforms initiative next year with the report of the Kelkar Task Force as the guiding principle, which may include a reduction in corporate tax rates with appropriate focus on significantly pruning the exemptions list.

The opinion in the government appears to be that the revenue base has been considerably diminished through exemptions and manufacturing continues to remain the focus of indirect taxation. While the service sector is now larger than 50 per cent of GDP and taxation of services has commenced, the service tax accounts for less than 0.5 per cent of GDP.

The Kelkar Task Force has pointed out that in the present context, tax compliance is expensive for honest citizens and “the probability of getting caught is low for violators”.

“This has led to an endemic culture of tax avoidance. India considerably lags the best international practice in exploiting information technology and new ideas in process design, in obtaining a frictionless and efficient tax administration which does not impose compliance costs upon honest citizens while faring well at spotting violators,” it said.

Dr Kelkar, who was earlier the Adviser to the Finance Ministry, has now been replaced by Dr Parthasarathi Shome, who has dropped strong indications that the government may in fact consider a cut in corporate taxes from the peak rate of 35 per cent.

“There is a room for reduction in rates of taxes, but not without a plan for how the tax base can be expanded,” Adviser to Finance Minister Parthasarthi Shome has said.

At the same time, however, he has added that a reduction in corporate taxes can be carried out only by appropriately widening the tax base.

The government is veering round to the view that expanding the tax base rather than increasing the tax rate should be the preferred strategy.

Within the ambit of broadening the tax base, available indications suggest that the government is seriously considering addressing the problem of exemptions.

For many decades, the tax base has been whittled away through a steadily escalating range of exemptions. As the Kelkar Report has pointed out, the removal of these exemptions will have twin implications.

Bangalore, November 6
Luciano Benetton, the legendary founder and chairman of the Benetton group here today unveiled the autumn-winter collection 2004 under the United Colors of Benetton banner.

In his first visit to the city, Mr Benetton unveiled the collection with a fashion show with top models like Tinu Verghis, Jackie Besterwich and Adam Bidappa.

“The essence of the collection is a mix of trends and classics that will be appreciated by our Indian customers — men and women alike,” he said. “India is a key market for the Benetton group and apart from evolving our products to suit the Indian market, we intend to give our customers a global shopping experience.”

Mr Benetton is on a five-day tour to India and will visit stores in New Delhi, apart from Mumbai and Bangalore. The Benetton group was established in 1965 in Ponzano Veneto in North-East Italy and today has over 5,000 stores in 120 countries.

New Delhi, November 6
Reliance Group Chairman Mukesh Ambani today said the company would approach the authorities to ensure that the consumer does not suffer because of a “commercial dispute” between its telecom venture and the BSNL.

However, Mr Ambani did not specify whether Reliance Infocomm would go to Trai, TDSAT or DOT.

The Reliance Group Chairman denied that there was a revenue loss to either the BSNL or the Union Government because of their telecom services.

The BSNL has charged Reliance Infocomm with passing ISD calls as local calls which had led to the public sector carrier sending notices demanding an access deficit charge.

However, Mr Ambani told mediapersons on the sidelines of the HT Leadership Initiative here that their services are “very transparent”.

Eyes oilfields abroad

Meanwhile, Reliance Industries Ltd today said it was looking at acquiring oil and gas fields in West Asia and west Africa.

“We look at all opportunities. There is an opportunity for India in emerging oil and gas fields in West Asia and west Africa. Announcement in this regard will be made in due course,” Reliance Industries Chairman Mukesh Ambani told reporters here.

The Mumbai-based giant has unveiled an ambitious plan to grow aggressively overseas in the coming years.
— Agencies

New Delhi, November 6
Amidst criticism on increasing prices of petroleum products, Prime Minister Manmohan Singh today got support from his wife Gursharan Kaur on the issue who asked people to make a “sacrifice”.

“I or any other housewife would never be in favour of a hike in the prices of LPG. But this is a compulsion of the government because the subsidies have been mounting day by day,” she told reporters after inaugurating an exhibition here.

“The government has to face losses to the tune of crores of rupees. The only way to tide over it is that we all get together and make a sacrifice,” she added.

“Handling these decisions is his (PM’s) department, I am no dictator,” she said.— PTI

Shimla, November 6
The World Bank has cleared a Rs 540-crore watershed development project for the Mid-Himalayas of the state.

A team of the World Bank, headed by Dr Daniel Sellen, met Chief Minister Virbhadra Singh here today. He informed that the World Bank had also agreed to extend the ongoing Kandi Project by another six months and provide an additional Rs 10 crore in view of the good work done so far. The project was to come to an end in March 2005.

The World Bank team, accompanied by senior officers from the Union Ministry of Agriculture, visited the Nurpur area of Kangra district, Bhattiyat area in Chamba and Solan district.

THE Central Industrial Security Force (CISF), in an image-building effort, has introduced ‘form-filling norm’ by passengers to determine their ‘service with smile’. To determine the quality of their service, the passenger will be provided a form to indicate whether the service is excellent/very good /good/ average or unsatisfactory. The passenger would also be asked to rate the behaviour and manners of the CISF personnel.

The information sought in the form (six questions) should be totally ‘confidential’. Actually it should be verified from regular flyers instead of every passenger.

In-depth study shows that behaviour and attitude of the CISF personnel on international airports is vastly different from their behaviour at domestic airports. At international airports, CISF personnel are inclined to pick a few illiterate passengers returning from Middle-East, have been treated roughly and toughtly.

The fact of the matter is that even after CISF’s taking over, neither immigration functioning, nor security aspect have shown any improvements.

FDI curbs

When it is hot, politicians want cold; when it is cold, they want hot. They keep shifting their stand. Statistics show more than half-a-dozen ministers during the last decade or about have swung to and fro in their
assertions causing uncertainty in the corridors of the Indian civil aviation.

The Minister of State for Civil Aviation Praful Patel in his latest statement says that FDI curbs on foreign carriers picking up stakes in domestic airlines may be ‘liberalised’. While declaring that investment bans on foreign carriers may be ‘reviewed’, he says that it will happen only after two national carriers, Air-India and Indian Airlines, have been stabilised by a level play-field.

When will two airlines stabilised? When will they breathe free with additional fleet of aircraft? When will factional fight with in A-I end? These and several other questions need to be answered before liberalising ‘open sky policy’, as suggested by the Naresh Chandra Committee.

The in-depth study of the Naresh Chandra Committee report and many other documents shows that the power that-be have been more inclined to favour private carriers than the two national airlines. Provide all facilities to private carriers and give them
concessions to fly on SAARC and other routes. But create proper environment so that the civil aviation shows improvement in all spheres, as it should be.

Corporate aviation

The health of civil aviation in the country is bad. But the health of corporate aviation is worse. Recently, seven persons, including two women and a girl, were injured when a six-seater Cessna aircraft hit power lines in Kota (Rajasthan). The Rajputana aviation aircraft was being used in showering rose petals on a religious procession of the Jain community.

The accident led to aircraft losing a wing. Apart from damage to the aircraft, the Indian aviation got another round of disrepute. The Directorate-General of Civil Aviation should caution all corporate aviators.

Q: I want you to confirm that if a stock market trader does non-delivery based transactions above Rs. 40 lakh in short-term, does he need to get his accounts audited? In the case of non-delivery based transactions, what is the criterion to get the activity labeled as speculation trading?

— Kumar Gandhi

A: There was a lot of confusion regarding whether the capital gains should be charged to tax at the special rates, normal rates or as speculative income or as business income. This has now been resolved after the concept of STT has come in. Delivery-based transactions will attract 10 per cent tax on short-term capital gains whereas the long-term gains would be tax-free. The day traders and dealers in Futures & Options can treat it as income from the business of day trading or F&O. This is separate from the other business activities.

As regards audit, there was also some confusion. For traders in equities, the turnover figure of Rs. 40 lakh was so small that one wondered whether it was really the intention of the legislation. In my opinion, even this confusion also stands resolved. Sec. 44AB requires audit of ‘Every person carrying on business’. Now that the ‘business of day trading or F&O’ has been separated from other business activities, no audit is required for the business of day trading or F&O.

I sincerely hope that the department concurs with my view.

Leave salary

Q: This refers to your article on the taxability of leave salary. In this respect, I have a query. The IT Act permits the leave salary to be treated as tax-free for a period not exceeding eight months. If the employee is one who, in the line with current trend, has switched over a few jobs, then how will the employer know if the employee has exhausted the benefit of eight months in his earlier jobs and in case the employer gives the employee a benefit of doubt, which later on turns out to be untrue, what is the liability on the employer.

I request you to throw light on his aspect.

— Sadanand M. Sahasrabudhe

A: For other employees, this exemption is subject to the least of —

a) Ten months average salary (calculated on the basis of the salary during 10 months preceding the employees’ retirement on superannuation or otherwise).

b) Cash equivalent of leave salary in respect of the period of earned leave standing to the credit of the employee. Earned leave cannot exceed 30 days for every year of actual service rendered for the employer from whose service he has retired.

c) The amount of leave encashment actually received.

d) Rs. 3 lakh (Notification 123/2002, dated May 31, 2002).

Where an employee has encashed leave in one or more years from more than one employer, the total amount exempt in this regard is subject to the above ceiling.

If the employee has switched over a few jobs, he is entitled to this benefit only on employee’s retirement. Moreover, when the employee switches a job, he has to submit a copy of the salary certificate (Form 16 or 12 BA) obtained from his former employer to the new employer to enable him adjust the tax for the whole year. This certificate will indicate the encashed leave salary amount. Moreover, the onus of the correct declaration is on the employee.

Forex reserves
Mumbai, November 6
India’s foreign exchange reserves has crossed the $ 121 billion mark during the week ending October 29 following inflows of $ 562 million, the Reserve Bank of India said here today. Foreign exchange reserves for the week under review grew by $ 562 million to $ 1,21,178 million, the Reserve Bank of India said in its weekly statistical supplement.
— TNS

HMT in black
Mumbai, November 6
The public sector HMT Ltd has posted a net profit of Rs 11 lakh for the second quarter ended September 30, 2004, as compared to a net loss of Rs 10.5 crore for the comparable period in the previous fiscal. Announcing this here today, the company said its total income had increased from Rs 9.33 crore in the second quarter of last year to Rs 58.34 crore for the period under review.
— UNI

Toyota CorollaNew Delhi, November 6
Toyota Kirloskar Motor (TKM) today said it sold 39,923 vehicles in the first 10 months of the current calendar year, up 23 per cent over the corresponding period in 2003. Toyota Corolla continues to be India’s bestseller in the executive segment with sales of 907 units, a 49 pc rise over the same period last year.
— UNI

Victor GXHisar, November 6
TVS Motor Company has launched Victor GX, an upgraded version of the Victor GL motor cycle, here. At a function, the new model was unveiled before the mediapersons. A company spokesperson said the motor cycle, priced at Rs 39,000 (ex-showroom), is available in six colours.
— TNS

SaharaOneChandigarh, November 6
Shashanka Ghosh has joined SaharaOne as promotional head. As per a company press note Ghosh brings with him years of experience and expertise in media, including many hit ad copy and TV channel shows.
— TNS

MCX pact
Ludhiana, November 6
Multi-Commodity Exchange of India (MCX), a commodity futures exchange, has signed an MoU with the Tokyo Commodity Exchange (Tocom). The tie-up aims at widening the scope of commodity exchange industry and attaining synergies between local and global commodity markets, Mr Jignesh Shah, managing director, MCX, said today. This is the first instance of any collaboration between and Indian and international commodity exchange.
— TNS

AirtelChandigarh, November 6
Airtel today launched the usage bonus transfer facility for its post-paid customers in Punjab. The Instant Post Paid 2in1 pack consisting of a Postpaid and Prepaid card. Every month, for 12 months, the Pre-paid card will get free airtime equivalent to 20 per cent of the total bill value of the post-paid card. The free airtime on the prepaid card can then be utilized for making Airtel-to-Airtel calls.
— TNS